The City of Tutland issued $10 million, 6 percent, 10-year bonds at 101 to finance refurbishment of its water utility fund equipment. The bond issuance is recorded in the water utility enterprise fund as

Question

Layne Herring

Business

22 December, 02:32

The City of Tutland issued $10 million, 6 percent, 10-year bonds at 101 to finance refurbishment of its water utility fund equipment. The bond issuance is recorded in the water utility enterprise fund as

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Answers (1)

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Lilliana Ball · Answer 1

The bond issuance is recorded as bonds payable of $10 million and premium on bonds payable of $100,000.

Explanation:

Since the bond is payable at 101, with a 6% rate for 10 years, after calculation you will find out that the bond payable is $100000 (10 year-bond payable at 101). The bond payment will be premium, meaning the payment of complete $10million over the course of 10years (apart from the $100000 payable bond)